Earlier this week, the Government revealed that a record 5.5 million private businesses are now operating in the UK. Perhaps most significantly, 99% of these businesses are classed as a small businesses with 50 employees or less.
A rise in the UK’s small business population is positive news for the economy. As demonstrated in our SME Heatmap, Britain’s entrepreneurial talent is spread across the nation, supporting the development of industries such as manufacturing, fintech, medtech and the sharing economy.
However, with record low interest rates and Britain’s forthcoming withdrawal from the European Union, it is vital that industry and government bodies now focus on putting in place the structure to help scaling private businesses flourish.
Access to growth finance remains a key issue, and alternative finance in the form of equity crowdfunding, peer-to-peer lending and tax-efficient investment schemes have proven vital. In 2015, the UK’s alternative finance market grew 84% to £3.2 billion worth of investments, loans and donations, with the equity-based crowdfunding market expanding by 295% since 2014 to reach £332 million.
Despite this impressive growth, earlier this year, Lord Turner openly challenged the long-term future of peer-to-peer lending as a viable source of alternative finance. Specifically, the former Chairman of the FCA stated that platforms could incur huge losses over the next five to ten years. The peer-to-peer industry was quick to respond, arguing that Lord Turner’s comments overlooked the significance of crowdfunding filling a gap in the market.
Speaking at peer-to-peer industry conference LendIt Europe on Tuesday, Lord Turner has now distanced himself from his earlier comments, acknowledging that peer-to-peer lending is “likely to become a stable, significance and useful part of our total credit supply system”.
Recently, our CEO Luke Davis was featured in City A.M. discussing the future of peer-to-peer lending, and the need for platforms to scale to meet future business demand. As the UK business population continues to grow, business demand for agile and democratic forms of finance will continue. Furthermore, initiatives like the Enterprise Investment Scheme will remain an integral part of the SME investment landscape, as we explore in our latest report, which you can read by becoming a member of Access 42.
Over the coming months, IW Capital will be releasing a series of further reports offering our industry-leading analysis of the alternative finance industry. This content will be available exclusively to Access 42 members.
Join Access 42, here.